BMW Considering North American Engine Plant

Bloomberg reports that BMW is considering the setup of an engine plant in North America. The rumored engine plant would help the production expansion plans …

Bloomberg reports that BMW is considering the setup of an engine plant in North America. The rumored engine plant would help the production expansion plans in the region and it could be setup in Mexico or United States.

Sources close to the magazine say that the decision could be reached in 2014.

The carmaker would join German premium-auto rival Mercedes-Benz in producing engines in the region as Asian and U.S. rivals already do. Mercedes will start using motors next year built at a Nissan Motor Co. (7201) plant in Tennessee.

BMW currently has its engine plants in Europe but a new factory will open in Shenyang, China to build 4-cylinder units , to supply the company’s local car plants in Dadong and Tiexi.

“Engine technology is BMW’s core competence,” Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler, said by phone. “Establishing local motor manufacturing abroad is more complex than assembling cars, but it’s a logical step for them to eventually start making engines in markets where they’re expanding vehicle production,” to reduce the cost of logistics and mitigate currency effects.

“As part of our long-term growth strategy, we’re frequently looking at different countries for possible locations of future production facilities,” Mathias Schmidt, a BMW spokesman, said to Bloomberg.